Monday, 29 August 2016

Turnbull Government about to walk back superannuation changes and cost federal budget bottom line up to $335 million over first four years?

ABC News, 23 August 2016:

Independent costings suggest the Federal Government could end up losing money out of its proposed overhaul of superannuation changes if a key measure is watered down.
The Government has proposed a $500,000 limit on after-tax contributions to superannuation, in a move it says will save $500 million over four years.

The changes have upset a number of Coalition MPs, with some pushing for the $500,000 limit to be increased.

Analysis conducted by the Parliamentary Budget Office (PBO) — commissioned by the Greens before the Government's proposal was put in place — suggest any increase of that limit could see those budget savings evaporate.

The PBO document from last year modelled the impact of hypothetical caps on superannuation after-tax contributions, ranging from $500,000 to $800,000.

According to the PBO, placing a $500,000 lifetime cap — which the Government is proposing — will see an additional $165 million put into government coffers over four years.
Increasing that cap to $600,000 would see those savings disappear — and end up costing the Government $85 million over the same period.

An $800,000 cap would cost the Government $335 million.....

The analysis did not look at the impact of back-dating the measures to 2007, which is a key part of the Coalition's proposal……

Mr Morrison announced the cap in non-concessional contributions as part of an overhaul of the superannuation system, forecasting it would save $550 million, starting from July 1, 2017.
Mr Morrison has been negotiating with the backbench following concerns raised within the Coalition about aspects of the policy.

On Monday, Mr Morrison resisted rolling-back on superannuation unless savings were found from elsewhere.

"I would find it pretty hard to look my kids in the eye and tell them they have got to saddle a higher debt because someone who had a very big income wanted to pay less tax," Mr Morrison told 2GB.

The changes are yet to pass through Federal Parliament.

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